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Technology Stocks : Dell Technologies Inc.
DELL 122.55+4.4%Nov 21 9:30 AM EST
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To: Chuzzlewit who wrote (44002)5/21/1998 11:35:00 AM
From: jbn3  Read Replies (1) of 176387
 
Hey Cat,

Can you explain to me why lower ASPs are automatically considered bad news?

Because I am tres naive, I figured thusly (assuming for the moment that unit growth is static)

1. If it costs a corp $1000 to produce a product in January, and
2. If it can sell that product at $2000 and
3. If it costs the same corp only $500 to produce the same product in February (because of increased efficiencies and lowered component costs) and
4. If it then sells the same product for $1900

We have a decrease in ASP but an increase in margin and profit. Why is that considered bad?

If one then changes the assumption that unit growth is not static but increasing, why is the decrease in ASP considered bad?

Is this one of those "Historically, ... " precepts, that presupposes an increased or static component and production cost?

Willing to learn, 3.
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